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Money News

BP ready to take Iraq oil, gas opportunities

DUBAI (Reuters) - BP is ready to compete for the opportunities that arise in Iraq’s oil and gas sector once the country passes its oil and gas law, a senior executive said on Sunday.

Iraq’s parliament has yet to debate the controversial oil law, but was expected to consider it this month. Washington has pushed Iraq for months to speed up passage of the oil law, which is among legislation it sees as pivotal to reconciling warring Iraqis and attracting foreign investment.

“We’ve studied all of Iraq and absolutely have a view on which are the relatively good looking prospects,” Steve Peacock, president of BP’s Middle East and South Asia Exploration and Production unit, told Reuters on the sidelines of a conference in Dubai.

“Whether it turns out to be a licensing round or some other form of offering, we’re ready.”

Iraq’s oil minister said last month the government hopes to call an open tender to develop its oilfields as early as this month if the law was passed. Developing the oil sector and boosting export revenues are key to reconstructing the country’s shattered economy.

The contracts and terms that Iraq may offer oil companies to work on its prized oilfields have yet to be defined.

The type of contract was much less important than ensuring the terms were attractive for both the oil company and the government, Peacock said.

“There are many forms of contract that can find that sweet spot in the middle,” Peacock said.

Oil companies tend to regard short-term service agreements as less of a lure than longer-term production sharing agreements.

Service agreements could be attractive if the terms compensate for the skills, tools and experience that international oil companies bring to the table, Peacock said.

BP would be unable to send people to work in Iraq until the security improves, he said.

“We hope that happens soon for the sake of Iraqi people, not just so that we can go in and do business,” he said.

RUMAILA

Recommendations that BP has made to Iraq on the southern Rumaila oilfields have had a positive effect on output there, Peacock said.

Studies that BP carried out on Rumaila, one of Iraq’s largest oilfields, showed that production could be boosted quickly with application of modern techniques, he added. He declined to detail the potential increase.

“This ought to be encouraging for Iraq, although I can’t say if all the fields look lie Rumaila.”

Years of war and sanctions and more recently insecurity have led to chronic underinvestment in Iraq’s oil sector and led to concern of permanent damage to oil reservoirs at fields such as Rumaila.

BP, like many other international oil companies hoping for eventual access to the world’s third-largest oil reserves, has a memorandum of understanding with Iraq’s central government to provide technical assistance and training.

BP was also looking at gas and alternative energy opportunities in Iraq, he said.

REGION

BP was eyeing potential opportunities for growth in the Middle East in Jordan, Kuwait, the United Arab Emirates and Oman, Peacock said.

BP’s focus for new opportunities was on producer plans to boost oil capacity and recovery rates and also developing supplies to meet the region’s rapidly growing gas demand, he said. A petrodollar-fuelled boom is driving gas demand higher across the Middle East.

BP was also eyeing plans by governments in the region to encourage the capture and storage of greenhouse gas emissions, he said.

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